A situation in which all markets are in equilibrium and all economic agents have made decisions in their own best interest is called
A)general equilibrium.
B)the liquidity effect.
C)the real wealth effect.
D)dynamic equilibrium.

Question

Quizplus · Accepted Answer

General equilibrium refers to a situation where all markets in the economy are simultaneously in equilibrium, meaning that the quantity demanded equals the quantity supplied and there is no excess demand or excess supply in any market. In general equilibrium, all economic agents have made decisions in their own best interest, and there is no room for further gains from trade. This is considered to be the most efficient and optimal state of the economy. The other options, the liquidity effect, the real wealth effect, and dynamic equilibrium, do not describe this specific state of the economy.

A Situation in Which All Markets Are in Equilibrium and All